Global stocks slumped Wednesday as the appetite for risk evaporated, with worries about Europe’s debt problems coming to the fore in the face of rumors about possible trouble at French banks and continuing fear of another recession.
French banks led European markets lower as Societe Generale plummeted nearly 20 per cent and BNP Paribas dove almost 13 per cent. The European banking index fared somewhat better, down 6.6 per cent.
Wall Street and European shares tumbled close to four per cent following two days of extreme volatility that included, on Monday, the sharpest drop in nearly three years. The euro dropped over one per cent against the dollar.
Speculation that France’s AAA rating may be at risk rattled markets, though three major agencies reaffirmed the top-tier rating. The jitters come after the US lost its prized AAA status last week.
The turnaround in equities followed a morning of gains in Europe and Asia that were prompted by the United States Federal Reserve’s dovish promise on Tuesday to keep interest rates low for another two years. —Reuters